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Common Resources in a Competitive Market

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Mark and Susan lives next door, and they plan to hire a security guard. The cost for a guard is $50 for Mark, $150 for Susan. Whoever pays the wage, this guard will guard both houses. How much wage can a guard ask for a maximum while being hired at least to one of them? If the wage for the guard is $120 in the competitive market, can Mark and Susan plan hiring the guard by each paying same half of the wage?

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If I understood correctly, the question is really trying to say the following:

- Mark is willing to pay $50 for the guard (if he does not pay, he will likely suffer a loss that costs him $50, hence the "implicit ...

Solution Summary

The common resources in a competitive market is examined.